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Thursday, November 12, 2009

Construction Software State of the Industry Report

Since I'm so deep in the middle of the construction software industry, I thought I'd pass along this article. It's just sinking in what I just wrote...."the construction software industry". BIM has moved out of the A/E realm as so many architects and engineers have blatantly refused to invest in technology, training and implementation, especially in regard to Revit and peripheral software. It really has been the contractors and subcontractors who have stepped up to the plate to make these investments and use technology to make building more efficient. Revit and Navisworks have really paid off for contractors and it's such a shame that those at the beginning of the design timeline are losing out.

I was having a conversation today with my favorite architect, Larry C when I said to him how in 10 years we'll look back at today's BIM technology, workflow and process and see how we're really in the floppy disc phase of BIM. When will we be in the flash drive phase and ultimately, the cloud storage phase of BIM?

It's amazing to me how Revit has created such an impact and is so disruptive to the status quo and how things have been done for the last 27 years. Of course, nothing is more disruptive than RFIs and Change Orders, but that's another story.

So, read the article below and lets have a conversation about the investment in technology around the AEC industry and how these damn computers and software programs are changing everything.

Remember, like drugs, we have dealers and users. Technology is addicting. Prescriptions and subscriptions. Is there a difference?


Posted on November 12, 2009
Don Fornes
This is the first in a series of “state of the industry” reports in which we will share our observations on construction software industry trends. While reporting the recessive state of the industry is not breaking news, there are some interesting trends that we can share. Not everything is gloomy, and significant technological shifts are underway.
Our observations are based on roughly 6,000 conversations with construction software buyers over the past year. In these calls, our team listened to buyers’ “pain points” – the business problems they were looking to solve with new software. From there, we recommended what we felt were the best solutions. We later surveyed each buyer to find out if they ended up buying software, what they bought and how it all went.
Estimating and takeoff solutions are in demand
We’ve seen a very healthy level of interest in construction estimating software across all divisions. Over and over we hear contractors saying something to the effect of, “Bidding has gotten very competitive, which means I’ve got to be as accurate as possible.” As a result, we’ve seen a lot of estimators replacing their spreadsheets and manual processes with database-driven estimating systems.
We’ve also seen plenty of interest in on-screen takeoff software. We’ve seen three primary reasons for this:
  • Increasing the speed and accuracy of takeoff measurements (see previous paragraph);
  • Avoiding the printing costs of paper plans; and,
  • Responding to increasing electronic plan delivery and use of online plan rooms.
While demand for onscreen takeoff appears fairly strong and growing, we have seen a considerable amount of downward pricing pressure in that market.
Software as a Service is in the right place at the right time
Software as a Service (SaaS) is gaining momentum in many software markets. In fact, we would agree with other IT prognosticators that SaaS is a major structural shift in software deployment and is here to stay. We’ve seen this model succeed in the project management segment where there is a clear need for the collaborative benefits of web-based software. Moreover, the current recession is making the SaaS model more attractive to contractors because:
  • Subscription pricing can easily be added to a project’s general conditions;
  • Low up-front costs allow project managers to avoid an onerous approval process; and,
  • Faster and less expensive implementation makes the new systems more digestible.
We have not seen much demand for SaaS accounting, estimating or service management, although we do get asked about it now and then. We also have not seen many vendors emerge to deliver that sort of solution. We would not be surprised to see SaaS accounting and/or estimating solutions emerge over the next few years.
LEED credit tracking creates new demand
Another trend driving the adoption of SaaS project management systems is the increasing demand for LEED credit tracking. LEED certification has grown in popularity; so too has the need to track the detailed documentation requirements related to earning LEED credits. At their core, projects seeking LEED certification need document control and efficient communication. This is the core of what project management systems deliver. Going one step further, we are seeing a number of project management vendors building in specific LEED credit tracking modules within their system. Houston Neal wrote a great post on how to Track LEED v3 Credits in Project Management Software back in July.
Stimulus funds are trickling down, slowly
Government and other civil construction has remained healthier than commercial and residential construction. However, we have not seen the American Recovery and Reinvestment Act of 2009 (ARRA) have a big impact on software spending. We believe that the temporary nature of stimulus spending is not enduring enough to drive capital investment in software systems. Our hope is that ARRA will help accelerate the economy to a point where traditional IT investment levels resume. However, Chris Thorman recently wrote a quick analysis of the ARRA that showed that stimulus spending has had a nominal effect on putting roughly 1.6 million unemployed construction workers back on the job.
There has been speculation that Stimulus-funded construction projects would drive sales of project management software. The thinking behind the forecast was that ARRA projects would require a higher level of accountability. Project management software – known for strong document tracking capabilities – would provide the audit trail needed for this transparency. However, we have not seen this translate into a meaningful increase in sales.
Fewer accounting & job costing replacements
We’ve seen fewer firms replacing their core accounting and job costing systems over the last year. In prior years, we had seen replacement activity when company growth pushed existing systems to their limits. In the absence of growth, more firms seem to be staying put with their existing systems. Firms that are buying new accounting systems tend to identify one or more of the following three pain points:
  • Inability to achieve detailed job cost reporting from “generic” accounting systems;
  • Lack of integration to project management or service management systems; and,
  • The need to accomplish same amount of work with fewer employees.
Outlook for 2010
As the construction industry begins to rub its sleepy eyes, we agree with most experts who say that 2010 will be a transitional yet slow year for the industry as a whole. Company budgets likely won’t fully recover in 2010, limiting the purchase of construction software. However, so far we’ve noticed more activity this quarter than any other this year. Hopefully this level of interest will carry over to 2010.
Meanwhile, we’re eager to hear your anecdotes. Do you have a firsthand account of the economies’ affect on IT spending? Leave us a comment below.


Bob Tinsley November 12, 2009 at 10:59 PM  

"BIM has moved out of the A/E realm as so many architects and engineers have blatantly refused to invest in technology, training and implementation, especially in regard to Revit and peripheral software."

Careful, I resemble that remark. We (MEP firm) invested in Revit MEP at the 2008 release. What a pain in the touchas! Revit for architects has been around for at least 10 years and has benefited from that time in use. Revit MEP is in the baby stages and is a pain to use. We have two clients (architects) that use Revit, one who insists we also use Revit and one who doesn't. Neither of these clients uses Revit the way it was meant to be used. To them it's just a fancy, hip, politically correct way to produce traditional 2-D paper bid sets. They don't even use it to check for interferences! It is really nothing more than a marketing ploy.

For smaller firms the investment in time and money to implement BIM, or even Revit, surpasses what they can get out of it given the present fee structure, so they don't do it. Design is the red-headed stepchild of the construction industry. We don't produce anything substantial like the GC does, so we don't deserve any more money, even if it would make us, and the project as a whole, more efficient. A short-sighted viewpoint, to be sure, but it is reality among owners who build one building every five or ten years. Especially so among the "turn and burn" guys.

So, yes, architects and engineers, especially firms with less than 50 people, are reluctant to jump on the BIM bandwagon, but there are good practical reasons for that reluctance.

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